The Deed of Company Arrangement process or DOCA as it is often referred to, is a means to salvage and restructure an insolvent or near insolvent company and provide creditors with a better outcome than they would experience if the company was to directly enter liquidation.
A Deed of Company Arrangement must follow a Voluntary Administration and is proposed by the Directors during the Voluntary Administration period. The Administrator investigates the proposed Deed of Company Arrangement and makes a recommendation about whether company creditors should accept or reject the proposal. As a rule of thumb the Deed of Company Arrangement needs to offer creditors a better outcome than if the company was liquidated.
There are a number of commercial considerations that need to be taken into account when drafting a Deed of Company Arrangement. It is not just a simple case of a company seeking to compromise debts with creditors. Often the company will need to make significant changes to the way it does business if the Deed of Company Arrangement is to have any chance of succeeding. In addition, the company and its directors will need to have some goodwill left with a majority of its creditors, as it is the creditors that will ultimately decide the company’s future, so acting early is vital.
At Shaw Gidley we have had extensive experience administering successful Deed of Company Arrangements.
If you wish to contact Shaw Gidley to make an enquiry regarding a deed of company arragnement, please use the enquiry form on the right and one of our Corporate Insolvency Services Team will respond to you in the near future.
With Offices in Newcastle, Central Coast and Port Macquarie, Shaw Gidley is your bankruptcy, liquidation and insolvency specialists.